Sarbanes-Oxley Can't Beat Culture of Good Old Fashion Greed

In response to Enron, WorldCom, Tyco, Peregrine and some of the biggest accounting firms playing a shell games with the corporate books, Congress enacted The Sarbanes-Oxley Act in 2002.

Today Siemens, based in Munich, Germany is being eyed for over 500 million dollars worth of bribes to public officials in Asia, Eastern Europe and Africa and other questionable payments by the company which occurred without top managements knowledge, according to the International Herald Tribune.

In Germany it is a crime for corporate officials to bribe a public official. It is a crime in most modern countries to report embellished earnings or hide essential facts to their investors. Essentially, Sarbanes-Oxley and every other codification of bad conduct cannot prevent anyone hell bent on greed from devising a plan of deception.

According to IHT, Professor Josef Wieland of the Institute for Intercultural Management, Values, and Communication at the Konstanz University of Applied Sciences, "Laws on corruption can be changed easily, but it takes a while to really abandon it as a business practice." He further states, "In the end it's not a question of sophisticated compliance programs, but a question of ethics and management culture."

So, some four years after Sarbanes-Oxley what have we accomplished? On the books we have an Act with 11 sections of compliance requirements. We have created 11 to the power of at least 10, the number of people and hours it takes to comply. We have codified words like trust, independence, and governance in the corporate world. The members of the Fortune 500 companies just add the cost of compliance to their costs of doing business, but the real effect is to fledgling companies.

At the time of the public outcry over the lies, scams and accounting cheats when Sarbane-Oxley was passed, the New York Stock Exchange had the highest number of IPOs. In 2006, the NYSE was beat out by both the Tokyo and London exchanges because of their less burdensome fraud reduction regulations. The smaller companies and private companies going public cannot absorb the massive technological and structural costs imposed by Sarbane-Oxley.

Interestingly, Sox would not have hindered or even bothered the corporate fraud of the companies which the Act was attempting to weed out. Sox has merely made it virtually impossible for new companies to wade into the deep waters of the big players on Wall Street. Sox will not deter some sizzling hot company dynamo from paying graft, a patronage fee, or cognac and wild women for some corrupt third world public official.

Sox, nor all the laws and regulations stacked end to end from New York to London will deter a company dynamo culture's goal which is to drive that new Ferrari across the Atlantic Ocean on the stacks of books created to appease public outcry.